Supply chain management in pharmaceutical industries: a study on Eskayef Bangladesh Ltd.

Abstract

Supply Chain Management (SCM) is the process of planning, implementing, and controlling the operations of the supply chain with the purpose to satisfy customer requirements as efficiently as possible. The sub-areas comprising a supply chain include: Forecasting/Planning, Purchasing/Procurement, Logistics, Operations, Inventory Management, Transport, Warehousing, Distribution, Customer Service etc. However, it is difficult to find a standard model of Supply Chain Management operating in the business community. Some business will refer to and manage their supply chains in a coordinated and all encompassing fashion, including the entire sub areas defined above. Eskayef Bangladesh Ltd is one of the largest and fastest expanding pharmaceutical companies in Bangladesh. The company, which has its headquarters in Dhaka (the capital of Bangladesh), is also known as SK+F and is a part of the Transcom Group. SK+F Eskayef Bangladesh Limited was born from the old facilities of SmithKline & French in Bangladesh when the company was restructured to form GlaxoSmithKline in 2000. The company is involved in the manufacture and distribution of a diverse range of pharmaceutical products and therapeutic drugs. The main research questions of this study are as (i) What is the supply chain of Eskayef Bangladesh Ltd?(ii) How does Eskayef Bangladesh Ltd manages its supply chain? (iii) Does the supply chain management of Eskayef Bangladesh provide competitive edge?(iv) What are the challenges in Eskayef’s supply chain?(v) How the barriers could be overcome to bring competitiveness? In view of the context and research questions, the broad objective of this study is to analyse the supply chain of Eskayef Bangladesh Ltd. The specific objectives are as (i) To assess the extent to which the supply chain function of Eskayef has been operating;(ii) To understand the supply chain management of Eskayef;(iii) To evaluate the supply chain sustainability. (iv) To identify the barriers and challenges of the supply chain of Eskayef (v) To make recommendations for overcoming the challenges and to design an effective supply chain management. Given the increased attention of achieving effective supply chain management particularly in pharmaceutical industries around globe, this study is devoted assess the supply chain management of a leading pharmaceutical company in Bangladesh namely Eskayef Bangladesh Ltd. SCM is also important for achieving competitive advantages over the business rivals through a stronger relationship, closer and collaborative cooperation as well supplier development. SCM also contributes in reducing cost of production and distribution through elimination of waste, compliance with standards and quality, promoting ethical sourcing, curbing unethical practices and diversity and equality in the workplace throughout the supply chain. The study focused on the overall supply chain management of a fast growing pharmaceutical company in Bangladesh. The study highlighted the theoretical aspects of SCM and its potential advantages for a manufacturing company where there is intense competitive rivalry within the industry. Relevant models and theories will be adequately analyzed in this study. Information gathered through secondary sources and survey questionnaires has supported to the research on what the extent of SCM is effective and contributing to achievement of corporate strategy of the organization under the study. Purposive and simple random sampling method are used to select 30 respondents who are directly involved in managing operations and supply chain of Eskayef Bangladesh Limited procurement, 60 from retailers and 30 from end customers. It is observed that 23.3% respondents have reported that they know the SCM very well followed by moderate knowledge (21.7%), sufficient knowledge (20%), somehow knowledge (20%) and 15% respondents have poor knowledge about SCM. The results show that only 25% respondents reported that they identified SCM as Data Collection, Supplier, Purchasing, Warehousing, Stocktaking, Distribution. While 46.7% respondents viewed SCM as Supplier Selection, Purchasing, Warehousing, Stocking, Distribution, 12% viewed SCM as warehousing and distribution and only 6% considered SCM as distribution. Multiple Response Analysis (MRA) is carried out to identify the benefits of SCM. Only 2.8% respondents identified no impact of SCM, 38.1% respondents reported high impact of SCM, 31% viewed medium impact. In regards to heavy impact 20.7% respondents opined that SCM has heavy impact on the supply chain. Factor Analysis of the responses regarding the benefits of SCM reveals that shorter lead time has high mean (4.15) followed by reduced cycle time (3.97), Reduced waste (3.80), competitive advantage (3.83), reduced cost (3.78), greater supply chain visibility (3.72), reduced inventory (3.62) etc. From the component matrix it is found that 12 factors have high influence on the benefits of SCM. These are enhanced quality and service (0.772), greater supply chain visibility (0.757) reduced waste (0.753), effective business process (0.737), reduced cost (0.737), reduced cycle time (0.727), information sharing (0.698), improve responsiveness to customer requirements(0.680), competitive advantage (0.656), cooperative organizational relationships (0.6.50). Components 2 and 3 are not important as most of the factors have negative coefficients. About 30.0% respondents reported that SCM of SK +F is successful, 25% as very successful, 21.7% as successful somewhat. Only 8.3% respondent reported that SCM is not successful at all, 15% reported as not successful. Regarding view on cost of EK+F products 43.3% retail respondents agreed that the cost is high as compared to other companies while 20.0% strongly agreed with high cost while 36.7% respondent are undecided on this issue. Regarding successfulness of SCM, 50% respondents from executives sample reported it as very successful. 27.7% respondents identified SCM as successful, 16.7% reported as successful somewhat and only 6.7% as not successful. The results of field survey reveals that 86.7% respondents has identified lack of coordination as a challenge to SCM while 80% as inventory management, 80% as order management, 33.3% as absent demand management, 50% as human resource management, 20% as shortage avoidance, 53.3% as expiration management, 66.7% as warehouse management, 63.3% as temperature control and 66.7% as shipment visibility. SK+F produces high quality products. The retailers survey results show that 36.7% of the respondents rated products from EK+F as better, 31.7% as good, 18.3% as excellent as shown in Table: . Regarding availability of EK+F products the survey results show that 33.3% rated as good, 31.7% as better and 21.7% as excellent. With regards to affordability 36.7 % respondents rated EK+F as good, 28.3% as excellent, 26.7% as better and 8.3% as moderate. Customer perception about SCM of EK+ F reveals that 46.7% respondents did not know it, 33.3% as know somehow and 20% know well. Regarding quality of SK+F products 43.3% respondents rated as better, 36.7% as good, 13.3% as moderate and 6.7% as moderate. Regarding availability of products 36.7% respondents rated EK+F as better, 26.7% as good, 16.7 % as moderate, 6.7% as excellent and 13.3% as poor. Regarding affordability of products 36.7% respondents rated EK+F as good, 307% as moderate, 23.3 % as better, 6.7% as poor and 3.3% as excellent. Regarding frequency of use of products 46.7% respondents reported more frequently use while 53.3 mentioned occasionally use. Regarding rating of products 33.3% respondents rated SK+F as good, 26.7% as good, 23.3 % as moderate, 16.7% as excellent. Regarding perception SCM 46.7 respondents reported do not know, 33.3% as somehow know and 20% as know well. About 65% of the retailer respondents reported supply and supplier risks, 41.7% as organization and strategies risks, 68.3% as financial risks, 75% as logistic risks, 38.3% as market issues, 68.33% as regulatory risks, 61.7% as inventory risks, 56.7% counterfeit risks. About 80% of the executive respondents reported supply and supplier risks, 26.7% as organization and strategies risks, 90% as financial risks, 86.7% as logistic risks, 63.3% as market issues, 86.7% as regulatory risks, 90% as inventory risks, 76.7% as counterfeit risks. The pharmaceutical industry is one of the most technologically advanced sectors currently in existence in Bangladesh. It has grown in the last two decades at a considerable rate. The skills and knowledge of the professionals and innovative ideas of the people involved in this industry are the key factors for these developments. About 300 pharmaceutical companies are operating at the moment. Only 3% of the drugs are imported, the remaining 97% come from local companies. Positive developments in the pharmaceutical sector have enabled Bangladesh to export medicine to global markets. By overcoming the underlying obstacles this sector can develop more and can be an effective exporting sector of Bangladesh.